Follow-up Questions
RECOMMENDATION M:
CONTINUATION OF
THE BLOCK
EXEMPTION
It would be helpful to have an update on work
in producing a thorough assessment of the costs and benefits of
the current arrangements prior to the submission to the Commission
of the Government contribution, and an indication of when DTI
will be submitting its final contribution
The Competition Commission has examined the
new car market in the UK since the Committee's report. In their
report published on 10 April 2000, the Commission concluded that
the selective and exclusive distribution system underpinned by
the cars block exemption had an adverse impact upon competition
in the UK market and that car prices in the UK were on average
some 10 per cent higher than they would be in a fully competitive
market. The Government has implemented the Commission's recommendations
which do not relate to the block exemption by an Order under the
Fair Trading Act 1973. This requires suppliers to offer dealers
who buy cars outright similar volume discounts to those offered
to fleet buyers. It also contains measures to stop discrimination
by suppliers over the terms of supply of cars for contract hire
according to whether the end user is a fleet customer or not,
to stop suppliers from putting pressure on dealers to advertise
particular prices, to discourage pre-registration of new cars
and to encourage dealers to parallel import. The Order came into
force on 1 September. Suppliers must have made their first offer
of volume-related discounts to dealers by 1 December.
As far as the cars block exemption is concerned,
however, the Competition Commission recognised that taking action
against practices permitted under European law posed complex legal
issues. DTI officials have been in discussion with their European
Commission counterparts over the options open to the UK but no
policy decisions have yet been reached.
The European Commission has itself been undertaking
a review of the operation of the present system. This concluded
that it has not achieved the objectives it was intended to meet
when it was put in place in 1995. In particular the market for
motor cars is still dominated by manufacturers and the present
system has not been particularly successful in its aims of promoting
either cross-border trade or multi-brand dealerships. The case
for continuing to link sales and servicing was also called into
question.
The European Commission intend to hold a hearing
involving all interested parties after publication of the report.
We expect their proposals on what regime should replace the current
block exemption to emerge early next year. The UK will be pressing
the Commission for radically different and pro-consumer proposals.
Telephone Numbering, Fifth Report of 1998-99,
HC 139: Government Response, Sixth Special Report, HC 395
1. Telephone numbering was a controversial
issue throughout the 1990s. In the light of public concerns, and
following correspondence from the Freephone User Group, the Committee
decided in December 1998 to inquire into telephone numbering and
Oftel's proposals for change.
2. The Report was published in February
1999; the Government's and Oftel's responses were received in
April 1999. The Report made a number of recommendations about
Oftel's proposals for change, particularly on the controversial
proposals for freephone numbers. The Committee found that there
was no compelling case for 0500 numbers to be migrated into the
0800 range. Oftel agreed to reconsider the option of leaving 0500
numbers unchanged. Oftel accepted many of the specific criticisms
levelled at it on its process of consultation and on the need
for a cost-benefit analysis.
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